How to Negotiate Mortgage Refinancing

A compelling offer might position you to obtain stellar loan terms.

Homeowners often engage in refinancing transactions to obtain more advantageous mortgage terms. Refinancing a home mortgage loan may result in lower monthly payments, consolidated debt, or a shorter repayment term. Using several strategies to negotiate a home loan could result in substantial savings, as prospective borrowers are able to compare mortgage terms from many lenders. Patient borrowers who are willing to perform their own research might discover lenders who are willing to negotiate various mortgage terms.

1

Order your consumer credit information. Review your current credit history, as well as any negatively reported information. Pay off debts that remain unresolved. Use onscreen tools from the credit bureau to dispute erroneous information. Knowing that your credit report has a favorable status may help during the mortgage negotiation process.

2

Apply online or at a local bank for a refinance loan. Give lender-requested documents to your loan originator. Request a loan approval form, and a good-faith estimate for the program that you are seeking. Written documents from a mortgage lender could be instrumental toward negotiations with other lenders.

3

Inquire about a home loan refinance through your current mortgage company. Ask your lender for a loan commitment letter and a good-faith estimate. Compare your lender's interest rates, loan origination points, and other fees against the other company's terms.

4

Speak with other mortgage companies about the refinancing terms that you've procured. Provide details about your qualifications, and the type of loan that you want. Submit lender-required information, such as your banking records, recent pay stubs, and tax returns. Request good-faith estimates, and a loan commitment from the lenders with competitive financing terms.

5

Discuss more attractive refinancing offers with your current lender. Ask your lender whether negotiable terms are viable toward retaining your business. Mention the strengths of the more attractive offers. Inform your lender of your desire to accept the best deal.

6

Present the terms that you're seeking to lenders who approved your request for a refinance loan. Use the commitment letters and good-faith estimates toward negotiating the terms that you want. For instance, if a competing bank offers a no-closing cost deal, you may be able to negotiate lower fees with the bank that offers the most attractive interest rate.

Tip

Ask each lender for details about the same loan product, such as a 15-year fixed-rate mortgage, or a 30-year fixed-rate mortgage. Comparing similar loan terms will provide a fair comparison during the negotiation process.

Warning

Negotiations often become time-consuming. Opportunities might be lost during attempts to secure a better offer.

About the Author

Ray Cole has written professionally since 1999 and has designed dozens of Web sites. Cole writes for eHow and "SF Gate." As a small business owner for over 15 years, he provides mortgage services, credit-related help and financial planning for his clients. Cole is currently writing a book about personal finance. He has also studied and taught martial arts for over 31 years.